Scientific Stock Speculation


  • Pages: 101
  • Format: PDF
  • Published Date: 1920


There are many, of course, who will quarrel with the title of this book, “Scientific Stock Speculation,” on the ground that speculation can never be reduced to a science. It is true that it cannot be reduced to a mathematical science, but it is certainlv entitled to be called a science in the same that economics is a science.

Science in speculation must deal with tendencies rather than with exact mathematical conclusions. It is verv noticeable that those who are most successful as investors for profit are usually of the type of the business man rather than the trained student of mathematics. The mathematicial is always seeking some invariable rule or fundamental principle of fluctuations.

This he cannot find. All speculative rules must be approximate. Any rule may he upset by the sudden development of new conditions.  To take as an example the old problem of the man rowing a boat directly across a river in a high wind: The mathematician, if given the rower’s rate of speed, the rate of flow of the river, and the effect of the wind on the boat, can resolve these forces and show how far down the river the landing will be at the other side.

Mr. Dow brings out very clearly the two ways in which the principle of averaging is employed in speculation: ·

  • ( 1) By buying small lots of a stock at fixed price intervals as it declines
  • ( 2) Taking small losses when wrong and calculating for a certain average of correctness; that is, for being right three times out of five, or four times out of seven.


  • Scientific Speculation
  • The Two General Methods of Trading
  • Three General Lines of Reasoning
  • Swings Within Swings
  • Methods of Reading the Market
  • The Operation of Stop Orders
  • Cutting Losses Short
  • The Danger in Overtrading
  • Methods of Trading
  • The Out of Town Trader
  • The Short Side of the Market
  • Speculation for the Decline
  • Concerning Discretionary Accounts
  • The Liability for Loss
  • The Recurrences of Crises